primed for growth, well-positioned against downside risks fy2000 results briefing march 5, 2001

Primed For Growth, Well-Positioned Against Downside Risks

FY2000 Results Briefing

March 5, 2001

2

S. Dhanabalan Chairman

Philippe Paillart Chief Executive Officer

Jackson Tai Chief Operating Officer

Kee Choe Ng Vice Chairman

Frank Wong Senior Managing Director

Panelists

Also available for questions

Chong Kie Cheong Finance Director

Ong Siew Mooi Head, Group Finance

Lim Lay Hong Financial Reporting

Tony Raza Investor Relations

DBS Corporate Office

3

Primed for growth, well-positioned against downside risks

Progress in our financial performance

Significant turnaround in asset quality

Migrating toward optimal capital structure

Maintaining a disciplined expansion plan

Protected on the downside, ready for a breakout

4

(S$ million) 1999 2000 Change (%)

Net Profits increased by 30%

Net interest income 2,035 2,039 0.2Fee and commission income 423 508 20.2Dividends and rental income 62 115 85.3Other income 509 268 (47.3)

Income before operating expenses 3,029 2,931 (3.2)Excluding exceptionals 2,854 2,881 0.9

Operating expenses 1,065 1,246 17.0

Operating profit 1,964 1,685 (14.2)

Excluding exceptionals 1,790 1,636 (8.6)

Provisions (1,064) (54) (94.9)

Associated companies 140 43 (69.3)

Taxes (379) (315) (16.9)Minority interest (410) (29) (92.9)

NPAM 1,072 1,389 29.6Excluding exceptionals 897 1,351 50.5

5

Core profits up 51%

Excluding exceptionals, growth was

50.5%

1,351

897

112

436

175

38

0

200

400

600

800

1,000

1,200

1,400

1997 1998 1999 2000

(S$ million)

1,072

1,389

6

Net interest income and margins were maintained

(S$ million)

Excluding the funding costs for BPI, interest margins for 2000 would have been 2.09%

Net interest income

1,002

1,430

2,035 2,039

0

500

1000

1500

2000

2500

1997 1998 1999 2000

2.022.02

1.771.73

1.5

2.0

2.5

(%)

Net interest margin (gross)

7

Fee income rose 20%

Fee to Income Ratio (%) 14.6 14.0 17.3

Proforma for FY00 the Vickers

merger raises DBS’s fee to income ratio

to 21.6%

Investment banking 42 85 98

Stockbroking 48 102 77

Trade-related 51 63 75

Fund management 10 20 62

Deposit-related 20 33 60

Loan-related 29 38 51

Credit card 22 25 33

Guarantees 27 28 26

Others 29 29 26

Total fee income 274 423 508

(S$ million) 1998 1999 2000

8

(S$'million) 1999 2000 Change (%)

Net Gains on Trading in Foreign Exchange 90 119 32.0

Net Gains on Sale of Trading Securities & Derivatives 186 55 (70.1)

Net Gains on Disposal of Investment Securities: Sale of SPC shares 117 - (100.0)

Others 26 41 57.7

Net Gains Arising from Divestment of DBS Tampines 58 - (100.0) Net Gains on Disposal of Fixed Assets 1 9 726.6

Others 31 44 39.2

Total Other Income 509 268 (47.3)

Other Income: Treasury FX improved 32%

9

Operating costs increased within budget

Excluding the variance from DKOB, which was consolidated from May 1999, the expense increase would have been 12%

Staff costs 529.3 613.2 15.9

Occupancy expenses 138.5 147.4 6.3

Technology-related expenses 108.6 132.4 21.9

Professional & consultancy fees 62.8 72.5 15.5

Others 225.5 280.2 24.2

Total 1,064.7 1,245.7 17.0

Cost-to-income (%) 35.2 42.5

(S$ million) 1999 2000 Change (%)

10

1,246

1,065

+12+16

+18+26+10

-10-76+57

+67

+61

(S$ million)

DBS Bank (+182m)

1999 2000

Staff co

sts

(+17.0%)Co

nsu

ltancy

Co

mp

uterisatio

n

Ad

vertising

Oth

ers

DB

S S

ecurities

DB

S C

hin

a Sq

uare

DB

S T

hai D

anu

Oth

er sub

sidiaries

DK

OB

At the Bank level, staff costs, technology expenses and advertising expenses accounted for 58% of the increase in operating expenses

Most costs tied to specific investments

11

Consultants now limited to implementation of specific, technical projects

1998 1999 2000 20011H99 9M00 1H01

• Phone Banking• Procurement• DBS Securities’ Projects• Customer Relationship Mgt• Treasury & Mkts System• E-Commerce• Risk Mgt System• Datawarehouse• Call Centre Automation• Business Intelligence• Achieve

Technology Procurement

• Cost & Profitability Mgt SystemMeasurement

• Institutional Banking Group ReorganisationRe-engineering Processing & Services

• Process Improvement

• Branch ReconfigurationCustomer Service

• POSBank, DTDB & DKOBIntegration

Strategy Development• Retail Strategy• Improving Profitability (DTDB NPL, Recapitalisation of DTDB, Sale of DBSL shares, acquisition of BPI)

12

Provisions declined by S$1 billion

DBS Thai Danu Bank 395.3 12.4 (382.9)

5 regional countries 117.1 49.1 (68.0)

Singapore 131.4 (49.8) (181.2)

Other countries 60.2 18.0 (42.2)

Non-loan provisions 34.5 51.9 17.4

Specific provisions 738.5 81.6 (656.9)

General provisions (48.3) (57.4) (9.1)

Total DBSH share 690.2 24.2 (666.0)

Minority interests’ share 373.0 29.4 (343.6)

Total group provisions 1,063.2 53.6 (1,009.6)

(S$ million) 1999 2000 Change

13

Profitability surpassing pre-crisis levels

ROA has returned to pre-crisis levels

ROE has surpassed pre-crisis levels even though CAR has returned to similar levels.

1.28

1.04

0.14

0.72

1.28

0.0

0.5

1.0

1.5

1996 1997 1998 1999 2000

12.89

10.35

1.29

5.72

10.30

02468

101214

1996 1997 1998 1999 2000

ROA (%)

ROE (%)

14

Assets are mostly from Singapore

Singapore81%

Rest of World5%Other Asia-Pacific

10%

Other ASEAN4%

Assets as of December 1999 were 81% from Singapore, 5% from Other ASEAN, 9% from Other Asia-Pacific, and 5% from the Rest of World

15

Singapore82%

Rest of World2%Other Asia-Pacific

12%

Other ASEAN4%

Revenues as of December 1999 were 86% from Singapore, 5% from Other ASEAN, 8% from Other Asia-Pacific, and 2% from the Rest of World

Overseas revenues are starting to contribute more

16

Balance sheet shrank due to soft loan demand and shedding of low-yielding assets

Dec 97 Jun 98 Dec 98 Jun 99 Dec 99 Jun 00 Dec 00

40.143.6

73.9

83.1 82.3 80.4 80.7

52.052.454.457.856.2

33.6

41.8

0

10

20

30

40

50

60

70

80

90

(S$ billion) Customer loans

Customer deposits

104.5

119.6

76.169.5

66.1 65.2 64.5

0

20

40

60

80

100

120

140L/D ratio

(%)

17

Decline in gross loans tapers off

-4000

-2000

0

2000

4000

6000

8000

10000

12000

14000

16000

-10

-5

0

5

10

15

20

25

30

35

Excluding the S$1.2 billion DTDB NPL sale, the loan contraction would have only been S$0.8 billion or down -1.5%(HoH) for 2H00.

Jun 98 Dec 98 Jun 99 Dec 99 Jun 00 Dec 00

(S$ million)

10.4%

3.4%-4.8% -3.8% -3.7%

30.7%

4,290

13,959

2,041

(2,965)(2,220) (2,053)

Change in Loans (Half on Half)

18

Decline in deposits offset by other products

(S$ million) Change in balance (Half on Half)

-2000

-1500

-1000

-500

0

500

1000

(847)

314

(1,866)

526320 347

Dec 99 Jun 00 Dec 00

Other products include the Horizon, Eight, and Up programs

Deposits

Other products

19







20

Significant decline in NPLs in second half 2000

2,705 2,824 2,425 2,4521,735

772

1,2391,408

1,365 1,1441,735

2,874

3,018 3,2073,000

1,238

1,249649

358

433435328267

15197366

667412

637717543

0

2,000

4,000

6,000

8,000

10,000


7.6%

12.7%

8.5%

13.0%13.1%

11.8%

2.7%

DBS Thai Danu Bank

DBS Kwong On Bank

5 Regional CountriesOthers

Singapore

NBk NPL/NBk Loans (%)

(S$ million)

1,112

3,907

7,085

8,121 8,1497,666

4,411

21

Most NPLs are classified substandard; some are still current

NPLs (2000)

3,508 358 546

250

295

956

2,552 325

32

0 500 1,000

1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000

DTDB

3,172

4,411

80%

80%

1,238

77%

Total (ex-DTDB)

Total (Incl-DTDB) 8% 12%

20%

(S$ million)

3%

Substandard

Doubtful

Loss

Approx. S$0.7 bn current, or 20% of Substandard

22

Provision coverage at 52% of NPLs or 61% on SEC basis

179948801

946

1,115

1,294

1,1911,174

1,049

1,237

3,095

2,032

2,8042,558

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500


164.6%

119.6% 102.7% 110.6%118.4% 114.8%

130.2%

51.8%51.9%52.6%47.4%44.4%48.5%

88.1%

55.3% 63.0% 60.8% 61.4%

General Provisions (GP)

Specific Provisions (SP)

SP+GP/NPLs (SEC) (%)

SP+GP/Unsec NPLs (%)

SP+GP/NPLS (%)

980

1,894

3,147

3,852

4,2863,978

2,286

(S$ million)

23

NPLs much lower under SEC reporting and after adjusting for restructured loans

Under SEC reporting NPL rate drops from 7.5% to 6.8%.

Assuming restructured loans are upgraded, NPLs under SEC reporting falls to 3.7%

1999 2000Singapore

Non accrual loans 1859 1403

Non-restructured 1471 897 Restructured 388 506

Regional countries

Non accrual loans 4,173 1,784

Non-restructured 3,666 698 Restructured 507 1,087

Other countries

Non accrual loans 770 537

Non-restructured 695 417 Restructured 74 120

Total non accrual loans 6,801 3,724Total restructured loans 969 1,712

Restructured / non accrual 14.3% 46.0%NPL under SEC reporting 11.6% 6.8%Non-restructured NPLs / total loans 10.0% 3.7%

24

Overseas NPLs fell by S$3 billion or 53%

Malaysia 412 62.2 304 47.1

Indonesia 566 97.9 176 58.5

Thailand excluding DTDB 234 49.3 49 16.2

Korea 76 17.4 51 13.2

The Philippines 77 20.1 87 17.0

DTDB 3,207 70.4 1,238 42.7

Total regional NPLs 4,571 65.3 1,905 38.9

Hong Kong 852 15.5 541 8.7

China 124 12.3 153 15.9

Total 5,547 41.1 2,599 21.5

(S$ million) NPLs NPL (%) NPLs NPL (%)

December 1999 December 2000

25







26

Strong capital continues to provide a cushion against possible global economic slowdown

(S$ million) 1998 1999 2000

Tier 1 9,621 10,463 10,200

Tier 2 793 2,379 3,211

Total Capital 10,414 12,842 13,411

Risk Weighted Assets 65,989 66,790 70,963

Capital Adequacy Ratio (%)

Tier 1 14.6 15.7 14.4

Total (Tier 1 + Tier 2) 15.8 19.2 18.9

(BIS)

27

Capital further supported by valuation surplus

1,916

807 692 589 498

1,204

1,164729 827

677

0

500

1,000

1,500

2,000

2,500

3,000

3,500

1996 1997 1998 1999 2000

(S$ million)

3,210

1,971

1,421 1,4161,175

PropertiesQuoted investments

Few remaining non-core assets to dispose

28

Pro-active management of capital base

Raised US$1.25 billion of Tier II Capital Divested non-core assets, generated S$1.3 billion in proceeds Redeemed S$600 million NVPS S$5.0 billion excess capital for growth, and contingencies Expecting to raise S$1.4 billion through a issue of Hybrid Tier I Migrating toward optimal capital structure

13.6 14.6 15.7 14.4

3.5 4.51.22.0

(%)

0

5

10

15

20

25

Dec-97 Dec-98 Dec-99 Dec-00

(*) Not to scale

OptimalStructure*

Tier 2

Hybrid Tier 1

Tier 1

15.6 15.8

19.2 18.9

CAR (BIS)

29

Increasing the returns on capital

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

1994 1995 1996 1997 1998 1999 2000

0

5

10

15

20

25CAR

ROE The improvement in ROE is not a gimmick of equity reductions as the CAR is back to pre-crisis levels.

Absolute capital has been increasing substantially as well.

2,000

4,000

6,000

8,000

10,000

12,000

1994 1995 1996 1997 1998 1999 2000

2.00

4.00

6.00

8.00

10.00

12.00

14.00Capital

ROE

0 0

Even with excess capital,ROE has been improving

30

Dividend rate hiked 80%

2530

15

1818

1616161616

5

128%

31%22%

23%13%14%15%22%18%

0

10

20

30

40

50

1992 1993 1994 1995 1996 1997 1998 1999 2000

-10%

30%

70%

110%

150%Special dividend

Dividend rate

Dividend payout

(Cents)

31







32

DBS’s expansion strategy remains unchanged

DBS has a disciplined expansion strategy Acquisition plans are not as haphazard as reported Management moves are being carefully planned

Recent Reports about DBS: DBS increasing its stake in BPI to 40%

DBS to purchase a stake in PCI Equitable (Philippines)

DBS acquires a 20% investment in Far Eastern Bank (Taiwan)

DBS looking to purchase Korean credit card business for US$1.6bn

Standard Chartered Bank and DBS to merge

DBS to issue more Tier II capital

DBS to increase stake in Wing Lung Bank

33

Building Asia’s best bank

Japan and Korea

Focus on ASEAN and Hong Kong

We have the capital resources and commitment to achieve this goal

Greater China

Australia and India

Southeast Asia and Hong

Kong

34

Progress in Hong Kong

Integrated DBS IT systems, treasury operations and product platforms

35 Customer Contact Points: Closed unprofitable branches and opened two new branches in Central, (one of which was best performer for 2000)

Pre-provision profits up 10% to HK$450m: achieved significant deposit (15.2%) and loan (17.5%) growth

NPLs fell by 57%, to 5.6% rate (under HKMA standards)

Refining skills to eventually take on a larger market share

Issued over 40,000 credit cards since the end of December 2000, easily on track for 100,000 target in 2001 (Note: at Chase deal values, 40,000 DBS cards would have cost US$60 million, more than our entire overhead for all of DBS Kwong On Bank)

35

DBS Vickers extends our cross-selling to clients

— DBS Vickers Branding

— Products & Services

Fulfillment

Regional IT/OP Platform

Treasury & Markets - FX - Derivative

DBS Bank - Asset Management - Financial Planning - On-line servicesResearch

Origination- Leading IPO, Debt market share- Securitisation capability

Distribution- 368 remisers & dealers- 11% market share- Singapore, HK, Thailand

36







37

A stronger bank, better protected against downside risks

Enhanced, regionally integrated credit and risk management systems

Sharp improvement in asset quality, and ability to resolve problem loans

Much stronger management depth, implementing best global practices

Continue to offer high CAR support even as we optimise capital, improve our returns on capital

Enhancing MIS, Costing systems to provide better analysis of businesses, exposures

No longer paralyzed overseas, cleaned up problems in Thailand

Investment in IT, operations will raise service quality, lower costs

38

Positioned for a breakout

Consumer Banking

Ideally positioned in mass affluent wealth management with dynamic asset management programs (Horizon, Eight, Up, Moneyplus).

Regionally integrating product and channel strategies; launching new products; credit cards and mortgage applications up

Treasury and Markets

Largest Singapore Dollar treasury player

FX and derivatives growing rapidly, based increasingly on sustainable customer related transactions

Investment Banking

Leadership in equity capital markets will be enhanced by Vickers’ distribution and research

Leader in debt capital markets

39







Primed For Growth, Well-Positioned Against Downside Risks

FY2000 Results Briefing

March 5, 2001

primed for growth, well-positioned against downside risks fy2000 results briefing march 5, 2001

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